EBRD and EU sign first loan under EFSD+ Financial Inclusion Programme  with Acba bank 

ArmInfo.The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) are helping improve access to finance for Armenian micro, small and medium-sized sized enterprises (MSMEs) through Acba Bank.

This collaboration sees the EBRD extending a loan equivalent to US$ 15 million in Armenian  drams to help Acba Bank reach more businesses, especially those  located in rural areas. The funding will also address the growing  demand for longer-term local currency financing.

Supported by the EU, the project operates within the framework of the  European Fund for Sustainable Development Plus (EFSD+) guarantee  programme.  This initiative introduces an innovative  first loss risk  cover, currently available in the southern and eastern Mediterranean  region (Egypt, Jordan, Morocco, Tunisia, Lebanon and the West Bank  and Gaza) and eastern Europe and the Caucasus (Armenia, Azerbaijan,  Georgia, Moldova and Ukraine). The EFSD+ financial inclusion  programme is designed to empower MSMEs, fostering their  competitiveness and growth. By offering effective financial tools and  expertise, the programme aims to drive development and create jobs.

The official signing of the loan agreement took place in Yerevan with  Acba CEO Hakob Andreasyan and the EBRD's First Vice President Jrgen  Rigterink formalising the commitment.

Mr Rigterink  said: "We are pleased to step up our support for MSMEs  in Armenia together with our financial and institutional partners. A  strong private sector is among the EBRD's priorities in the country  and the funding will support more private businesses in rural areas.  Making the funding available in drams will protect borrowers from  foreign currency-related risks."

Lawrence Meredith, Neighbourhood East and Institution Building  Director at the European Commission, commented: "We welcome this  EU-backed loan agreement between the EBRD and Acba Bank, which will  provide new opportunities to MSMEs across the country, especially in  rural areas. Supporting a sustainable, innovative and competitive  economy is among the five flagship initiatives of the EU's Economic  and Investment Plan in Armenia. As we address the pressing need for  extended local currency funding, we pave the way for a more resilient  and innovative future for Armenia's business ecosystem."

Hakob Andreasyan, CEO of Acba Bank, added: "Acba Bank and the EBRD  have a rich history of partnership going back to 2003. Our  partnership has continuously expanded over the years through  different programmes directed at supporting the Armenian economy,  particularly during economic shocks or downturns. The EBRD has been  always innovative in its programmes. We are delighted to join our  forces once again with our partners, the EBRD and the EU, to continue  to support local MSMEs in terms of their current liquidity needs and  long-term investments, especially in rural Armenia.''

This project also contributes to the implementation of the EU's  Economic and Investment Plan (EIP) in the Eastern Partnership  countries. One of the key flagship priorities of the EIP for Armenia  is to promote a sustainable, innovative and competitive economy by  directly supporting up to 30,000 small and medium- sized enterprises  (SMEs) in the country. 

Acba Bank, a long-standing partner of the EBRD since 2003, is one of  the leading banks in Armenia, with a strong position in lending to  agriculture and MSMEs, especially in rural areas. With its network of  64 branches in all regions of Armenia, it can reach out to numerous  clients in diversified sectors. 

The EBRD is a leading institutional investor in Armenia. The Bank has  invested close to ?2 billion across 206 projects in the country to  date, where it is supporting private sector development and the  transition to a sustainable, green economy.

According to the Financial Rating of Armenian Banks as of June 30,  2023, prepared by ArmInfo IC, ACBA Bank is the undisputed leader in  lending to the agricultural sector - 122 billion drams ($316  million), thereby covering over 44% of the total market volume.  Agricultural loans account for about 26% of the Bank's loan  portfolio. ACBA Bank also takes the lead in lending to SMEs - 225  billion drams ($583 million), ensuring an annual growth of 57.1%. In  the Bank's loan portfolio, the share of SME loans accounts for over  47%, and in the total market volume the bank's share reaches 20%. In  terms of total loan investments, ACBA Bank is in the TOP-5 with a  volume of 476.2 billion drams or $1.2 billion, ensuring an annual  growth of this indicator by 17%.